Elon Musk Is Starting A STEM Focused School In Austin Texas

Forbes

Kerry Dolan, Wealth Assistant Managing Editor, joins 'Forbes Talks' to discuss Elon Musk's latest school venture and how billionaires invest in education.   0:00 Introduction 0:19 Elon Musk's Recent Investment To Build A School 1:49 Elon's Approach To Philanthropy And Education  5:28 Billionaire Donations And How They're Measured 8:07 Experiential Schools And Curriculum Among Billionaires

Transcript

00:00 Hi, I'm Allie Jackson Jolly. I'm joined by my colleague, Carrie Dolan, who is an assistant

00:08 managing editor for the Wealth Team here at Forbes. Carrie, thanks for being here with

00:12 us.

00:13 Well, thanks for having me, Allie.

00:16 Yeah, and you know, who better to talk about the recent news that Elon Musk plans to pledge

00:24 $100 million to launch a new primary and secondary STEM-based school in Austin than you, because

00:32 you've done a lot of coverage on the world's billionaires, including Mr. Musk. So may I

00:38 ask you, when you saw this, what was your initial thought? Is this something new? Does

00:46 this feel out of character for Musk? Or what were you thinking when you saw this?

00:50 So when I heard about this university, I thought, aha, another Elon Musk school. This is becoming

00:56 a little bit of a tradition. So he started a school with another guy called Ad Astra

01:03 in Los Angeles, specifically for his own kids and for the kids of SpaceX employees, because

01:09 SpaceX is what used to be headquartered just outside LA. And that school was then morphed

01:18 into another school called Astra Nova, which is now an online school for 10 to 14-year-olds.

01:28 And it's very experimental. And what I've read is that it has about 250 students. So

01:33 he's clearly interested in a different kind of education. And I think it stems from wanting

01:39 his own kids to get hands-on challenges and great teachers and et cetera. And also his

01:47 other employees.

01:48 Yeah, I'm glad you mentioned that. Because what occurred to me when I was reading this

01:54 is that Elon Musk has said for that first university, he did it primarily to begin with

02:02 because he wanted his children to have a better school. With this new primary and secondary

02:07 school in Austin, he's had conversation around not being confident that there's enough excellent

02:14 STEM, future excellent STEM employees to staff up his own company. So this feels different

02:23 to me than many of the other education philanthropists in that often they will say that they're trying

02:29 to do this to, you know, further society, make a more educated society. Am I thinking

02:34 about that the right way? Is the way Elon Musk is approaching this a little different

02:38 than other philanthropists that you've covered?

02:41 It does seem a little bit more self-serving. I mean, one thing that I did read about this

02:45 new proposed school is that there's no guarantee that the children of trustees or professors

02:53 will gain admission to the school. But does that mean that they won't get admission to

02:59 the school? And it does have that little patina of more self-serving than, for example, we

03:04 just did, we just published a list earlier this week of the 15 largest individual donations

03:12 to colleges and universities ever. And, you know, a lot more, most of those, pretty much

03:19 I would say all of those are serving a potentially much broader population. Although a lot of

03:27 them are going to very well-funded universities. But for example, the largest one of those

03:32 gifts was $1.8 billion from Mike Bloomberg, the former mayor of New York City and the

03:36 co-founder of Bloomberg, the media and financial information company. And that actually is

03:44 going to help, this was made in 2018, it's going to help Johns Hopkins undergrad students

03:50 not have to graduate with debt. So instead of having to take out loans, they're able

03:54 to get financial aid. So it's all earmarked for financial aid.

04:00 Another big new donation, new-ish donation was $1.1 billion pledge from John Doar and

04:07 his wife, Ann. John's a venture capitalist at Kleiner Perkins, to Stanford for a new

04:12 sustainability school. So that would, you know, that's a benefit for everybody that's

04:16 going to study sustainability at Stanford. There's a school for that, they've hired professors

04:21 and that stuff. So that's not necessarily tied to John Doar's family. So I think there

04:27 is a little, there's definitely a difference there. I mean, I will say that Elon is not

04:31 the only one who's like, I can do a school better myself. I mean, these gifts we looked

04:36 at are going to establish universities. There have been other billionaires that have started,

04:41 not too many, but one of the ones that come to mind who started just a school similar,

04:45 maybe similar to Elon's is Jeff Green, a Florida-based real estate billionaire who started the Green

04:50 School in Palm Beach, which is a pre-K through 12th grade school. You know, I think it came

04:57 out of the similar maybe frustration that Elon has with the existing education system

05:02 that, you know, we can do better, right? And I mean, I think this is a theme that you hear.

05:06 I mean, there have been stories about maybe not billionaires, but I live in San Francisco.

05:11 There are certainly schools that have been started by groups of tech employees to create

05:17 a small school for their kids because they think they can do better than the public schools

05:20 are doing or even existing private schools. So there is kind of a trend of like we can

05:25 do better for our kids than is out there.

05:27 Yeah. And how about, so you referenced those other billionaires who are wealth holders,

05:33 we'll call them in case there are hundreds of millionaires that decided to try it themselves,

05:41 create a brand, launch a brand new school, whether it's for profit or not for profit.

05:45 In Mr. Musk's case, this is a not for profit school. But what does this hundred million

05:54 dollars look like compared to those other wealthy Americans or world's wealthiest who

06:02 decide to launch? Like what is a hundred million? When you hear that, does that feel like, oh,

06:07 that's pretty big? Or does that feel like, you know?

06:10 I mean, it's interesting. It's, you know, compared to Musk's fortune, which we put around

06:16 two hundred and forty two billion or so, depending on the day, you know, Tesla stock goes up

06:21 and down every day. A hundred million dollars is a drop in the bucket compared to his fortune.

06:27 Right. A hundred million dollars, though, is a pretty big piece of all of the money

06:32 that we calculate that Elon Musk so far has given away about four hundred million dollars.

06:39 So this is one of the biggest chunks of his philanthropic giving that we've seen to date.

06:45 He's got a bunch more money sitting in his foundation, which is waiting to be given away.

06:49 But when we look at philanthropic giving, we're looking at money that foundations have

06:54 parted with, like the Billionaire's Foundation, which has actually given to a recipient rather

06:58 than giving to their own foundation. So I mean, I think you can definitely go a long

07:02 way with a hundred million dollars to start a school. It's like these smaller schools

07:06 that I've heard about in San Francisco. I mean, there's some like I mean, I know somebody

07:09 who's essentially being paid to run a school for like a few people here and get a longtime

07:16 teacher who's, you know, was hired to do this. So there's there's these one offs, much smaller

07:21 investments. This is this is much bigger. But the interesting thing is, like when we

07:25 did this list of the biggest gifts to colleges and universities, we looked at the 15 biggest

07:32 and we had about five or six that tied essentially at number, you know, they tied at the bottom

07:38 of those 15 at 500 million dollars. And so we have, you know, in terms of Elon's giving,

07:47 it's not not record breaking compared to the kinds of gifts that the world's richest people

07:54 that America's richest people have been given to American universities and colleges.

07:59 I mean, the other thing that I think we could talk about, too, is, you know, there's a there's

08:02 lots of different flavors of this billionaires in education. There's there's also people

08:08 who've actually got become billionaires by starting educational institutions, not too

08:14 many of them, but perhaps the best known to most Americans might be the University of

08:22 Phoenix, which is a for profit school that has campuses around the country and online

08:26 schools that was started by a former San Jose State professor, John Sperling. It ended up

08:31 it was a for profit company and is a for profit company, I should say, and was publicly traded.

08:39 And John Sperling became a billionaire and then his he's he's since passed away. And

08:43 then his son, Peter Sperling, who worked there and inherited a bunch of the shares. He is

08:48 a currently a billionaire. He's since sold the school. So he's a billionaire from selling

08:52 it. And then there's a company people may be familiar with called EF, which is founded

08:59 by a guy named Bertolt Holt from Sweden. And that's EF stands for Education First. And

09:04 they've got English language language training programs and travel education programs in

09:10 more than 100 countries. And that's been that's made him this guy Bertolt Holt into a billionaire.

09:17 So there's definitely money to be made in education as well as money as education sucking

09:23 up donations. So there's sort of two sides of this billionaires and education story.

09:27 OK, so, Kerry, we're out of time. Thank you so much for coming in chatting with us about

09:32 Mr. Musk's new school that he's planning to launch. Let me ask you this parting question.

09:41 Do you expect that next year when you do the same list of education philanthropists, is

09:49 he now going to make this list? Is he going to be someone that you guys are digging into?

09:53 Or is he kind of small potato still? I mean, I think it depends on the parameters of the

09:59 list. If we did the same parameters that we just did, we're just looking at the 15 largest

10:03 gifts. I mean, we looked at gifts to date from now, you know, from back going back 25

10:09 years, he wouldn't make that list. And if we did it again, it's the same parameters.

10:14 So I mean, but still, 100 million dollars is a lot of money. Yeah. OK, well, let's see

10:20 if he gets it off the ground. Kerry, thank you so much for joining us. And let's do it

10:25 again sometime.

10:26 Thank you.

10:27 Thank you.

10:28 Thank you.

10:29 Thank you.

10:30 Thank you.

10:31 Thank you.

10:32 Thank you.

10:33 Thank you.

10:34 Thank you.

10:35 Thank you.

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